ANZ Profit Rises 10% on Market-Share Gains, Overseas Income

ANZ Bank said today margins at home had “recovered slightly” since the end of March and the bank is on course to meet a target of 20 percent of earnings from Asia and overseas this fiscal year. Photographer: Ian Waldie/Bloomberg

Net income in the nine months ended June 30 climbed to
A$4.4 billion ($4.6 billion), Melbourne-based ANZ Bank said in a
statement today. Underlying profit, which excludes some one-time
costs, rose 5.5 percent to A$4.5 billion.

Australian banks are working to protect profitability as
competition pushes up the cost of winning customer deposits, and
Europe’s debt crisis weighs on funding costs. ANZ Bank said
today margins at home had “recovered slightly” since the end
of March and the bank is on course to meet a target of 20
percent of earnings from Asia and overseas this fiscal year.

“It looks good,” Peter Esho, the Sydney-based chief
market analyst at City Index Ltd., a London-based provider of
trading services in bonds, stocks and commodities, said in an
interview. “They’ve maintained margins and the lending growth
looks strong.”

Shares of ANZ Bank climbed 3 percent to A$24.61 at the
close in Sydney, the most since Dec. 1 and extending this year’s
gain to 20 percent. The benchmark S&P/ASX 200 index rose 0.9
percent.

Commonwealth Bank of Australia, the nation’s biggest bank
by market value, this week forecast mounting costs to win
customer deposits and a period of low credit growth. National
Australia Bank Ltd. on Aug. 14 said third-quarter profit was
unchanged as lower revenue was offset by a decline in bad debts.

Economic ‘Headwinds’

ANZ Bank’s group profitability was “stable,” while the
bank’s overseas businesses expanded with “positive second-half
revenue trends,” it said. Still, the lender said it was facing
“headwinds from softer economic conditions.”

“We’re not running the business on an expectation that the
subdued lending environment will end any time soon,” Chief
Executive Officer Michael Smith, who pledged to freeze his
salary for another year in 2013, said on a call with investors
today. “The low credit-growth environment is one we have to
accept as the new norm.”

The bank’s focus on Asia, where it operates in 16 regional
markets, offers potential for growth as competition for deposits
increases in Australia, Smith said. The Australian business won
market share in household deposits, lending and commercial
banking, ANZ Bank said in the statement.